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Battery Battle between LG Chem and SK Innovation Poses Thorny Problem for the U.S.
USTR May Veto a Ruling in Favor of LG Chem
Battery Battle between LG Chem and SK Innovation Poses Thorny Problem for the U.S.
  • By Jung Min-hee
  • December 24, 2019, 09:35
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The legal battle between LG Chem and SK Innovation over electric vehicle (EV) battery technologies has posed a thorny problem for the United States.

The legal battle between LG Chem and SK Innovation over electric vehicle (EV) battery technologies has posed a thorny problem for the United States.

The United States International Trade Commission (ITC) is grappling with the issue as its decision will have a far-reaching effect on the U.S. automobile industry as well as on the fates of the two Korean companies.


The ITC said on Dec. 23 that the three parties involved in the case -- LG Chem, SK Innovation, and the U.S. Office of Unfair Import Investigations (OUII) -- handed in second written opinions on Dec. 6 and Dec. 11, respectively, at the request of the U.S. court that tries the case.

LG Chem requested a default judgment against SK Innovation, claiming that the defendant concealed and destroyed the evidence intentionally and deliberately. “If our claims are not true, SK Innovation should have proved innocence, but it did not,” said LG Chem in its statement. In the meantime, SK Innovation admitted that there were some problems in its way of preserving the evidence. But it said it had no ulterior motive, saying, “We have done everything to preserve the evidence since a lawsuit was filed.” SK Innovation asked the court to dismiss LG Chem’s entire requests.

The OUII, which submitted a written opinion in favor of LG Chem to the court on Nov. 15, has maintained the same opinion. Its second letter suggests that the court should accept LG Chem’s request for default judgment against SK Innovation. The OUII also says that SK Innovation went too far in destroying the evidence when compared with other cases. It suspects that the electric battery maker did not comply with the ITC’s digital forensic order with malicious intention.

The ITC ordered a forensic investigation in October in support of LG Chem’s claim that SK Innovation did not submit documents containing crucial evidence that it had breached LG Chem’s trade secrets. Later, LG Chem asked the ICT to make a default judgment against SK Innovation, claiming its rival had destroyed evidence in a systematic and extensive manner before and after the litigation, and failed to implement the forensic order.

The OUII handed in a letter of opinion in favor of LG Chem to the court while SK Innovation submitted a rebuttal in the mid November one after another. As the opinions were sharply divided, the court ordered them to clarify their positions, but each side simply reconfirmed their earlier stances in the second letters.

The Wall Street Journal (WSJ) said in a Dec. 19 article titled “Why the global auto industry is worried about a Korean feud?” that the ITC seemed to be leaning toward LG Chem’s side while the Trump administration, which wants to build more EV battery production lines in the United States, might be tempted to be lenient toward SK innovation.

If SK Innovation loses the case, it will be banned to bring its EV batteries into the United Sates. This can cause disruptions in the supply of EV batteries in North America, which can, in turn, do damage to the U.S. auto industry. In addition, the U.S. government wants to build more EV battery production plants within its country, points out the WSJ.


The WSJ forecasts that this issue can eventually be brought up to the U.S. Trade Representative (USTR). To put it another way, even if LG Chem wins the ITC lawsuit, the U.S. government can exercise the veto.
 

Industry watchers say that this litigation is drawing keen attention from not only Korea but also the global auto industry and governments in many countries, putting a heavier burden on the court that has to make a decision.